The press machine is buzzing with reports that Micron Technology, Inc. (NASDAQ:MU) is in discussions with Changjiang Storage to license memory technology of both NAND as well as DRAM.
Pacific Crest analyst Weston Twigg commends the idea, although underscores that the deal has not been finalized yet. For now, the analyst remains sidelined, reiterating a Sector Weight rating on MU with a fair value ranging from $15 to $20, which represents a close to 23% downside to an almost 3% upside from where the shares last closed.
“No deal has been made, according to the reports, but a deal is possible next year and an agreement could move beyond licensing to include a joint venture (JV) or share ownership. We would expect that 3D NAND IP would be a priority,” the analyst notes.
Moreover, Twigg explains this IP deal would be beneficial for the semi-conductor giant, adding, “Ideally, Micron could license technology that is not leading-edge and collect fees without committing capital. In our view, this would be a positive outcome.”
“We have suggested this as a possibility in the past, particularly given Changjiang’s ownership structure, which connects to Micron through Intel. If true, we would likely view a Micron technology licensing deal or partnership as a positive event, as it could allow Micron to generate more-consistent and higher-margin revenue through memory cycles without committing substantial capital,” Twigg surmises.
According to TipRanks, which measures analysts’ and bloggers’ success rate based on how their calls perform, five-star analyst Weston Twigg is ranked #158 out of 4,227 analysts. Twigg has a 78% success rate and gains 17.3% in his yearly returns. When recommending MU, Twigg earns 0.0% in average profits on the stock.
TipRanks analytics exhibit MU as a Buy. Based on 20 analysts polled in the last 3 months, 15 rate a Buy on MU, 3 maintain a Hold, while 2 issue a Sell. The 12-month average price target stands at $20.20, marking a nearly 4% upside from where the stock is currently trading.